NEW DELHI: Standard Chartered Bank's private equity arm will invest 250 crore in RJ Corp's Varun Beverages International, PepsiCo's biggest bottler in South Asia, in a deal that values the company at more than $1 billion.

Under the deal formalised on Monday, Varun Beverages will issue 5% stake to Standard Chartered Private Equity in fresh equity.

The money will be used to expand PepsiCo's bottling businesses in India and overseas markets such as Morocco, Nepal and Sri Lanka, RJ Corp owner Ravi Jaipuria said.

"To leverage the huge opportunity of growth, we need to build large capacities involving huge capital expenditure," he told ET.

This is the biggest funds infusion for RJ Corp till now. In May, ICICI Ventures had invested close to Rs 175 crore for a 10% stake in its foods arm Devyani International.

Ravi Jaipuria runs around 13 PepsiCo bottling plants in India and abroad and controls most of PepsiCo's bottling operations in India.

It is also the holding company of Varun Beverages India, which controls the remaining franchisee bottling businesses of the group. Standard Chartered PE expects the company to leverage the huge growth opportunity for PepsiCo in India and Africa.

"The existing low per capita consumption of soft drinks in India offers tremendous growth opportunity. With over four decades of experience in beverages, RJ Corp is uniquely positioned to capture this opportunity," said Standard Chartered PE Director Udai Dhawan, who will be joining the Varun Beverages board. The Private Equity has till date invested over $2 billion in Indian companies.

Varun Beverages plans to go for an IPO in 2014. Raj Gandhi, president and group CFO of RJ Corp, said the deal with Standard Chartered would help the company achieve economies of scale through expansion. "The business model is now totally hedged through operations at multiple geographies," he added.

In the high-potential African market, RJ Corp expects its bottling business to touch $1 billion in the next three years.

RJ Corp's foods arm Devyani International, too, is on an expansion spree and plans to go public before 2013.

Devyani holds franchisee rights for Yum Restaurants-owned Pizza Hut and KFC, exclusive franchisee rights for UK-based coffee chain Costa Coffee and has recently set up its own chain of South Indian restaurants, Vaango.

It plans to set up 150-160 new restaurants this year across brands like Pizza Hut, Costa Coffee and KFC. The funds will also support expansion of RJ Corp-run KFC stores in Africa. RJ Corp also owns majority stake in a beer joint venture with Anheuser-Busch InBev, owns ice-creams brand Cream Bell, franchising rights for Walt Disney group company Disney Artist, and has interests in education, real estate and hotels.

While the restaurants and franchising operations are consolidated under Devyani International, the beverages business is grouped under Varun Beverages.

The chain has already announced an investment of 100 crore in its Vaango chain over the next few years. DIL currently operates over 200 food and beverage outlets across the country.

In '08, RJ Corp had consolidated all food, retail and franchise operations under group company Devyani International, including Pizza Hut and KFC and Costa Coffee.